SWIFT Data Reveals Growing Dominance of US Dollar in Global Payments
The global financial messaging service platform, SWIFT, has revealed the growing dominance of the US dollar in global payments. SWIFT FX transactions encompassing the US dollar reached a record high of 46% in July. It is also notable that the transactions of the Chinese yuan have witnessed remarkable growth.
SWIFT Data Records 46% of FX in US Dollar
The US dollar's grip on global payments has surged to new heights, as revealed by the latest transaction data from the leading financial messaging service platform, SWIFT. The Society for Worldwide Interbank Financial Telecommunication (SWIFT), which seamlessly links over 11,000 banking entities, securities firms, and corporations across more than 200 nations, reports that the US dollar in international transactions reached an all-time high.
Glimpsing into the numbers, the statistics reveal the share of SWIFT foreign exchange transactions encompassing the US dollar rocketed to 46% in July. A sharp climb from a mere one-third a decade ago as reported by Bloomberg this week. This surge is a testament to the enduring influence of the greenback on the global stage. SWIFT compiles close to 200 million FX per annum.
It is also fascinating to note that the growing number of US dollar transactions on SWIFT has been reached at the cost of the euro, which peaked at 46% share in 2012. The European common currency in trades subsequently plummeted to its lowest level, trading marginally below a quarter.
More Countries Exploring Yuan Amid Dollar's Supremacy
Looming beneath the dollar's surge, the data unveils a resurgence in transactions tied to the Chinese yuan. The insights highlight that over 3% of instructions transmitted via the SWIFT network were yuan-related, marking the second-ever instance. An astonishing rise from the 0.03% recorded in 2010, this metamorphosis underscores the yuan's growing allure in the global foreign exchange transaction.
A notable trend emerging is the growing number of nations moving away from the dollar and veering towards the Chinese yuan or other domestic currencies. Spearheaded by the BRICS bloc (Brazil, Russia, India, China, and South Africa) this global de-dollarization movement gained momentum this week during the 15th annual summit in Johannesburg, South Africa. Here, the leaders rallied around the usage of national currencies in international trade and financial transactions.
Several leading economists are skeptical regarding the US dollar's perpetual reign. Esteemed economist and Nobel laureate, Paul Krugman, joins the chorus of voices predicting an eventual erosion of the dollar's dominance. However, many experts contend that the Chinese yuan does not seem to be a formidable challenger to the dollar's supremacy.
Do you think the Chinese yuan could challenge the dominance of the US dollar? Please share your thoughts and opinions in the comments section below.
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